Moody’s Assigns City of Darien Aa2 Bond Rating
The rating means the city is in a “solid financial position,” according to advisors Speer Financial.
Moody’s Investors Services assigned the city of Darien a Aa2 bond rating Thursday, which means the city remains in good financial standing.
The rating was issued as a preliminary step as Darien looks to refund a roughly $3 million bond issued when it built the water tower along Plainfield Road, City Administrator Bryon Vana said.
Refunding the bond is similar to refinancing a mortgage, he said. The city expects to save roughly $140,000 by seeking a lower interest rate.
A high rating is critical for the refunding process to go smoothly, he said.
Speer Financial President Kevin McCanna, who consults with the city on financial affairs, said in a statement a Aa2 rating puts Darien in the top quarter of all raitings.
“The rating reflects the City’s solid financial position and modest debt burden, both of which reflect the City’s conservative management,” McCanna said.
Moody’s came to its rating by analyzing the city’s tax base, financial position and debt burden. In total, Darien has about $8 million in general obligation debt.
Some of the strengths Moody’s noted in its report include Darien’s home-rule government, which gives it flexibility in raising revenue; the city’s solid financial position and strong savings; and its substantial tax base in the Chicago area.
Its challenges include “exposure to economically sensitive revenue sources” and declines in assessed property values.
One of the sensitive revenue sources Moody’s named is Darien’s reliance on sales tax. Nearly 35 percent of the city’s 2011 revenue came from sales tax, Moody’s noted. To compensate for a 12 percent decline from 2008 to 2010, the city increased its home rule sales tax rate by 0.25 percent.
Darien also received a Aa2 bond rating the last time Moody’s analyzed its debt, which Vana said was prior to the 2008 financial crisis.
“It’s very good for all of us to see that our current rating is the same,” he said.
The City Council will address the bond refunding issue at its next meeting, which is scheduled for 7:30 p.m. June 18 at City Hall.